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Benefits Simplification

There are numerous different estimates of the size of the problem, but I completely agree that there is a significant problem with low take-up. The Government have admitted that too; they have put aside a reserve for improvements in take-up if that can be achieved. They also aim to deal with the problem and they appreciate that it has a financial impact. The third and perhaps most important advantage of simplification is the potential improvement in work incentives. During this debate, we have heard about the better-off calculation. It might help if we pause to understand what that involves: a half-hour interview with a benefits expert in a benefits office. The expert has the advantage of a large and complicated piece of software to do the calculation. I am sure that everybody here will agree that that is not a work incentive. Even if the better-off calculation comes out positive, as it does in most cases nowadays, the person has to go to somebody else's office, sit down with them for half an hour and have a complicated and intrusive conversation to work out that they would be better off. That is the very opposite of a work incentive, which has real force only if the job offer or job advertisement in the jobcentre or anywhere else makes a person think, ““Aha! If I take that job, it will pay me.”” Waiting for three weeks for an appointment and going through the process that I have just described is not a work incentive in any meaningful way, although it might be arithmetically correct that the person would be better off after the calculation. Simplification and making the point abundantly clear to everybody when they make the personal decision about whether they should go for a job, rather than later on, is essential and will be a vital and significant advantage of simplification if it can be achieved. What are the Government doing to move towards that agenda? To be fair, the Committee noticed significant signs of progress in some respects. We were particularly impressed by the Lean pathfinders, which are an attempt to produce an almost Toyota-like continuous improvement cycle by asking staff who are involved in benefits processing how to improve what they are doing, then taking their ideas, getting them into the system fast and putting them into practice. That struck all of us as a wholly admirable initiative that should be rolled out quickly. Secondly, there is ““My DWP””—an attempt to solve some of the problems of multiple different application forms, with a pilot in Wallsend. That could also be tremendously valuable. Thirdly, let us not forget the efforts of the benefits simplification unit, which is small but none the less has a role to play and has had some success in preventing the problem whereby successive waves of improvements stemming from suggestions in this House add to complexity. The unit provides a valuable service in spotting which proposed improvements will add to complexity and which will reduce it. That is an essential service that has been long neglected. The problem with all three of those Government initiatives, important as they are, is that they are essentially bottom-up. They try to create improvements in administrative efficiency and better processing in the existing system but make no attempt to address some fundamental problems of benefit design. Four of the six causes of complexity that I mentioned relate to means-testing, changes in circumstances, having too many small benefits with too many tightly drawn eligibility rules, and the linking rules. None of the initiatives addresses the fundamental design problems that cause those difficulties. They address two of the six causes of complexity—regular amendments and initiatives and administrative inefficiency—but not the four most difficult and fundamental causes. The Government's approach is rather like that of the man who was found in the middle of the night searching for something under a street light. When a passer-by asked him what he was doing, he said, ““I'm looking for my keys.”” The passer-by, trying to be helpful said, ““Where did you lose them?”” The man replied, ““I lost them about 100 yards down the road, but there's no street light down there so I'm looking for them over here instead.”” The Government are not looking where the real problem is. They must face up to the fact that if they are to make significant progress on these fundamental design issues, they will have to try an awful lot harder and face up to some much more knotty problems than they are currently willing to address. It would be perfectly reasonable to say, ““This is hard, and we haven't got all the answers.”” Nobody has all the answers. However, the Committee's criticism, which was echoed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey, was that we do not see sufficient evidence of vision and drive in addressing the four, admittedly difficult, fundamental problems in our benefits system. I am hoping to hear from the Minister about that. In our report, we attempt to start a national debate. As the Chairman of the Committee said, a commission on benefits reform may be necessary. The Committee's proposal is not perfect or complete —we all admit that it has plenty of flaws—but we all signed up to it as a thought-starter: a way of getting the debate under way and trying to tickle from the Government some sort of statement about their vision in terms of creating a drive towards the kind of simplified benefits system that we describe. We are saying to the Government: ““Here is a starting point for this debate. Please will you either come up with a better vision or tell why this one is wrong so that we can at least start to create the sort of national conversation that will be needed to create the democratic consensus across the political spectrum and get this solved?”” It has been done already; the Government had the courage to do it on pensions reform, and a similar sort of initiative is required in this case. We came up with such an idea. It is in annex A of the report, and I am pleased to hear that the hon. Member for Inverness, Nairn, Badenoch and Strathspey has taken the trouble to read it. That probably makes three of us who have actually got through the thing. [Interruption.] Three of us outside the Committee, I should point out. We had high hopes on the Committee that the Government would use that idea as a starting point, and as a springboard. We hoped that we would see some sort of attempt to engage with it in the debate. The idea has flaws, but there are at least two things that are seriously worthy for consideration as a thought starter, which might lead to the building of a consensus. One is the idea that we should combine working age tax credits, jobseeker's allowance, income support and the new employment support allowance in one overall benefit, with the condition placed on it that a person would have to be willing and able to work before it was paid to them. That may be a good idea or not, but it is seriously simpler than what we have at the moment, and it avoids an enormous amount of the problems related to change of circumstances and to the cycle of people going in and out of work that I described before. It also avoids the problems relating to the linking rules. We proposed a marginal deduction rate as a clawback mechanism to avoid the problems of means-testing, where anyone who went into work would have their benefit withdrawn at a particular rate to be decided by the Government. Such a system would be an awful lot faster and simpler to administer than the current tax credit system because it would simply require the Department for Work and Pensions to inform Her Majesty's Revenue and Customs of a single number for every person earning a wage, which would then be withdrawn through their tax code. Again, that may be a good idea or not, but all we wanted was a constructive and considered response from the Government. I am sad to say that that is not what we got. On page 18 of the Government's response, they afforded the entire idea only this:"““The Committee's model is more radical—a form of Citizens Income””—" incidentally, it is not. Then went on to say:"““As described it appears, at least at first sight, to carry a risk of both very high expenditure and reduced work incentives.””" Full stop, end of response. As an attempt to start a debate, that is absolutely pathetic. I am sad to say that it is not just pathetic, but also intellectually lazy, complacent, arrogant and weak, and I believe that it shows that the Government are scared. I know that we need to do better, and I sincerely hope that the Minister will say how the Government propose to do better.